Masterworks io

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jdkoerner
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Masterworks io

Post by jdkoerner »

Looking to diversify using $5000 I'm currently in bitcoin I'm sure you know how thats going. Now I'm looking into masterworks io. Allows you to buy small piece of art that sell for $2,000,000 or more. Haven't done due diligence yet. Anyone here of this? Is this another scam?
inverter
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Re: Masterworks io

Post by inverter »

How about VTI?
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arcticpineapplecorp.
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Re: Masterworks io

Post by arcticpineapplecorp. »

do you think it's possible at a future date you might be posting something like this:
jdkoerner wrote: Wed Jan 19, 2022 12:01 pm Looking to diversify using $5000 I'm currently in masterworks io. I'm sure you know how thats going. Now I'm looking into mynextspeculation.com. Haven't done due diligence yet. Anyone here of this? Is this another scam?
to answer the question though, you can listen to some Meb Faber podcasts. He's had the CEO or someone high up on his podcast at least once and he has them advertise on his show (not that that passes the smell test).
https://mebfaber.com/2020/12/07/episode ... curitized/

Did you hear a recent planet freakonomics podcast about in art and why the market is the way it is? (two or three parter if memory serves):
https://freakonomics.com/podcast/the-ar ... isruption/
Last edited by arcticpineapplecorp. on Wed Jan 19, 2022 12:12 pm, edited 3 times in total.
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pizzy
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Re: Masterworks io

Post by pizzy »

arcticpineapplecorp. wrote: Wed Jan 19, 2022 12:08 pm do you think it's possible at a future date you might be posting something like this:
jdkoerner wrote: Wed Jan 19, 2022 12:01 pm Looking to diversify using $5000 I'm currently in masterworks io. I'm sure you know how thats going. Now I'm looking into mynextspeculation.com. Allows you to buy small piece of art that sell for $2,000,000 or more. Haven't done due diligence yet. Anyone here of this? Is this another scam?
Maybe the goal is to lose the $5,000? :wink:
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nisiprius
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Re: Masterworks io

Post by nisiprius »

This looks ominous.

Image

At the very least, as part of your due diligence you should dig deeply enough into it to figure out what the heck they mean, exactly, by that. How will you know when the waters have been tested? What, exactly, will happen to customers if, after testing the waters, it turns out that the waters aren't fine?

There's been a wild explosion of fintechs offering various kinds of ownership-ish maybe-rights in things that you couldn't own before. This statement seems to be screaming that they are so new that they don't fall under existing regulations, so you're in a buyer beware situation.
Last edited by nisiprius on Wed Jan 19, 2022 12:12 pm, edited 1 time in total.
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bertilak
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Re: Masterworks io

Post by bertilak »

jdkoerner wrote: Wed Jan 19, 2022 12:01 pm Looking to diversify using $5000 I'm currently in bitcoin I'm sure you know how thats going. Now I'm looking into masterworks io. Allows you to buy small piece of art that sell for $2,000,000 or more. Haven't done due diligence yet. Anyone here of this? Is this another scam?
I wouldn't use the word "scam" without further investigation. Your post here might be a good start! The first thing I would worry about liquidity: is there an active market?
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nisiprius
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Re: Masterworks io

Post by nisiprius »

Never having heard of Regulation A of the Securities Act of 1933, and never having needed to know what it was before, I looked it up.

Regulation A (Wikipedia)
In the United States under the Securities Act of 1933, any offer to sell securities must either be registered with the United States Securities and Exchange Commission (SEC) or meet certain qualifications to exempt it from such registration. Regulation A (or Reg A) contains rules providing exemptions from the registration requirements, allowing some companies to use equity crowdfunding to offer and sell their securities without having to register the securities with the SEC.[1] Regulation A offerings are intended to make access to capital possible for small and medium-sized companies that could not otherwise bear the costs of a normal SEC registration and to allow nonaccredited investors to participate in the offering. The regulation is found under Title 17 of the Code of Federal Regulations, chapter 2, part 230. The legal citation is 17 C.F.R. §230.251 et seq.
In short:

It allows retail investors to invest in unregistered securities.

Maybe that explains the flood of fintech crowdsourcing platforms.

I believe the next thing you should do is get a clear answer to the question "Is Masterworks io registered with the SEC, yes or no?"

If the answer is "no," it doesn't mean it is a scam, exactly, but it does mean that it is in an entirely different category of risk from stocks, bonds, ETFs, and mutual funds.

I personally would never touch something that wasn't a registered security, but I'm a timid soul.
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arcticpineapplecorp.
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Re: Masterworks io

Post by arcticpineapplecorp. »

or could it be:
I personally would never touch something that wasn't a registered security, but I don't take unnecessary risks. I only take risks for which I'm likely to be compensated.
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Re: Masterworks io

Post by drk »

Masterworks started advertising on a few podcasts that I occasionally listen to, and it's made me even more skeptical of the idea. I don't think it's a scam or a fraud, but the whole thing seems just opaque enough to invite misdeeds in the long run.
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Re: Masterworks io

Post by ruralavalon »

jdkoerner wrote: Wed Jan 19, 2022 12:01 pm Looking to diversify using $5000 I'm currently in bitcoin I'm sure you know how thats going. Now I'm looking into masterworks io. Allows you to buy small piece of art that sell for $2,000,000 or more. Haven't done due diligence yet. Anyone here of this? Is this another scam?
Instead I suggest Vanguard Total Stock Market Index Fund (VTSAX) or the ETF share class (VTI).
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
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Re: Masterworks io

Post by Cramerica »

jdkoerner wrote: Wed Jan 19, 2022 12:01 pm Looking to diversify using $5000 I'm currently in bitcoin I'm sure you know how thats going. Now I'm looking into masterworks io. Allows you to buy small piece of art that sell for $2,000,000 or more. Haven't done due diligence yet. Anyone here of this? Is this another scam?
I have been looking into this myself, as well as investing in Hollywood movies.

The interesting thing about movies is it's a 100% tax deduction (through a type of bonus depreciation).
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arcticpineapplecorp.
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Re: Masterworks io

Post by arcticpineapplecorp. »

Cramerica wrote: Wed Jan 19, 2022 3:27 pm I have been looking into this myself, as well as investing in Hollywood movies.
do you also invest in rubber oil bladder systems that will "put an end to maritime oil spills"?
https://en.wikipedia.org/wiki/The_Voice_(Seinfeld)
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arcticpineapplecorp.
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Re: Masterworks io

Post by arcticpineapplecorp. »

Cramerica wrote: Wed Jan 19, 2022 3:27 pm I have been looking into this myself, as well as investing in Hollywood movies.
yes we know:
viewtopic.php?f=1&t=368256&newpost=6460 ... ead#unread
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Re: Masterworks io

Post by Cramerica »

arcticpineapplecorp. wrote: Wed Jan 19, 2022 3:55 pm
Cramerica wrote: Wed Jan 19, 2022 3:27 pm I have been looking into this myself, as well as investing in Hollywood movies.
do you also invest in rubber oil bladder systems that will "put an end to maritime oil spills"?
https://en.wikipedia.org/wiki/The_Voice_(Seinfeld)
Despite the detractors, most of the wealthiest people in the world invest in fine art, time pieces, and other non-traditional private equity investments like film. And it's not because they are dumb money
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Re: Masterworks io

Post by stoptothink »

Cramerica wrote: Wed Jan 19, 2022 3:59 pm
arcticpineapplecorp. wrote: Wed Jan 19, 2022 3:55 pm
Cramerica wrote: Wed Jan 19, 2022 3:27 pm I have been looking into this myself, as well as investing in Hollywood movies.
do you also invest in rubber oil bladder systems that will "put an end to maritime oil spills"?
https://en.wikipedia.org/wiki/The_Voice_(Seinfeld)
Despite the detractors, most of the wealthiest people in the world invest in fine art, time pieces, and other non-traditional private equity investments like film. And it's not because they are dumb money
Do they actually "invest" in these things or are they a hobby? Did any of them get to be that wealthy from investing in such things? Do any of these investments represent a significant portion of their wealth?

Even if the answer is yes, I'm not sure that is relevant to anybody on this board as they are unlikely to be that wealthy to begin with.
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Re: Masterworks io

Post by sport »

The expression about "a ten-foot pole" comes to mind.
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Re: Masterworks io

Post by Doctor Rhythm »

More of a theoretical or forum rules question, but would fine art be considered a “greater fool” investment strategy? Does a David Hockney have underlying value - and how about my drawings of my cat?
Last edited by Doctor Rhythm on Wed Jan 19, 2022 6:26 pm, edited 1 time in total.
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Re: Masterworks io

Post by Explorer »

jdkoerner wrote: Wed Jan 19, 2022 12:01 pm Looking to diversify using $5000 I'm currently in bitcoin I'm sure you know how thats going. Now I'm looking into masterworks io. Allows you to buy small piece of art that sell for $2,000,000 or more. Haven't done due diligence yet. Anyone here of this? Is this another scam?
You want to go from one ponzi to another? Sheesh :oops: :oops: :oops: :oops: :oops:

How about buying "productive", "revenue generating" businesses - such as SP500, or TSM or a sector fund or such? You get the drift.
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Re: Masterworks io

Post by arcticpineapplecorp. »

Cramerica wrote: Wed Jan 19, 2022 3:59 pm
arcticpineapplecorp. wrote: Wed Jan 19, 2022 3:55 pm
Cramerica wrote: Wed Jan 19, 2022 3:27 pm I have been looking into this myself, as well as investing in Hollywood movies.
do you also invest in rubber oil bladder systems that will "put an end to maritime oil spills"?
https://en.wikipedia.org/wiki/The_Voice_(Seinfeld)
Despite the detractors, most of the wealthiest people in the world invest in fine art, time pieces, and other non-traditional private equity investments like film. And it's not because they are dumb money
I love when articles talk about how much money someone made for selling a painting but never compare it to a more diversified portfolio or diversified market. Like this article about Oprah Winfrey's selling a Klimt in 2017:
https://www.bloomberg.com/news/articles ... nese-buyer
Winfrey, chief executive officer of the television channel Oprah Winfrey Network, bought “Portrait of Adele Bloch-Bauer II” for $87.9 million in 2006 at Christie’s in New York -- still an auction record for the Austrian artist. Since then, its value has risen about 71 percent.
Was that a good rate of return? Depends on what else she could have invested her money in. How did that compare to Vanguard's total stock market index fund (using dates in the article roughly, purchased in 2006 so used 1/1/06 and article reported 2/8/17 (she would have made 138.42% instead...almost twice as much with far less risk (diversified) and far fewer costs, as in no storage or insurance costs for the VTSAX like her painting). See below. By the way that return INCLUDED the downturn (GREAT RECESSION).

Image

http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D
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Re: Masterworks io

Post by oldcomputerguy »

bertilak wrote: Wed Jan 19, 2022 12:12 pm
jdkoerner wrote: Wed Jan 19, 2022 12:01 pm Looking to diversify using $5000 I'm currently in bitcoin I'm sure you know how thats going. Now I'm looking into masterworks io. Allows you to buy small piece of art that sell for $2,000,000 or more. Haven't done due diligence yet. Anyone here of this? Is this another scam?
I wouldn't use the word "scam" without further investigation. Your post here might be a good start! The first thing I would worry about liquidity: is there an active market?
This is what it says on the Masterworks io web site:
We select the artists - Our research team uses our proprietary data to determine which artist markets have the most momentum.

We purchase the art - Our acquisitions team locates what we believe is a good piece, at a fair price, and we purchase the work.

We securitize the artwork - We file an offering circular with the Securities and Exchange Commission allowing anyone to invest.

We hold the artwork 3-10 years - Wait until we sell the painting to receive your pro rata proceeds, after our fees.

- OR -

Sell shares on the secondary market* - You have the option to seek to sell your shares on our secondary market.

* We cannot assure you that the Secondary Market will provide enough liquidity, a reliable or effective means of monetizing your investment or valuing your shares.
Also:
Masterworks is not registered, licensed, or supervised as a broker dealer or investment adviser by the SEC, the Financial Industry Regulatory Authority (FINRA), or any other financial regulatory authority or licensed to provide any financial advice or services.
Definitely not something I want to invest in.
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Cramerica
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Re: Masterworks io

Post by Cramerica »

arcticpineapplecorp. wrote: Wed Jan 19, 2022 6:41 pm
Cramerica wrote: Wed Jan 19, 2022 3:59 pm
arcticpineapplecorp. wrote: Wed Jan 19, 2022 3:55 pm
Cramerica wrote: Wed Jan 19, 2022 3:27 pm I have been looking into this myself, as well as investing in Hollywood movies.
do you also invest in rubber oil bladder systems that will "put an end to maritime oil spills"?
https://en.wikipedia.org/wiki/The_Voice_(Seinfeld)
Despite the detractors, most of the wealthiest people in the world invest in fine art, time pieces, and other non-traditional private equity investments like film. And it's not because they are dumb money
I love when articles talk about how much money someone made for selling a painting but never compare it to a more diversified portfolio or diversified market. Like this article about Oprah Winfrey's selling a Klimt in 2017:
https://www.bloomberg.com/news/articles ... nese-buyer
Winfrey, chief executive officer of the television channel Oprah Winfrey Network, bought “Portrait of Adele Bloch-Bauer II” for $87.9 million in 2006 at Christie’s in New York -- still an auction record for the Austrian artist. Since then, its value has risen about 71 percent.
Was that a good rate of return? Depends on what else she could have invested her money in. How did that compare to Vanguard's total stock market index fund (using dates in the article roughly, purchased in 2006 so used 1/1/06 and article reported 2/8/17 (she would have made 138.42% instead...almost twice as much with far less risk (diversified) and far fewer costs, as in no storage or insurance costs for the VTSAX like her painting). See below. By the way that return INCLUDED the downturn (GREAT RECESSION).

Image

http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D
That's an apples and oranges comparison. If you're going to compare a single painting, you'd have to compare to a single stock. There are plenty of companies that went bankrupt in that recession you cite. Plenty of other single stocks that underperformed the painting.

It would be interesting to compare a diversified basket of fine art works to a diversified basket of stocks. You also don't include any potential rebalancing benefit. The people that buy these likely already own a lot of VTI (or similar) and the art market may not be as correlated or efficient, which would open up opportunities.
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Re: Masterworks io

Post by Doctor Rhythm »

Cramerica wrote: Wed Jan 19, 2022 7:03 pm That's an apples and oranges comparison. If you're going to compare a single painting, you'd have to compare to a single stock. There are plenty of companies that went bankrupt in that recession you cite. Plenty of other single stocks that underperformed the painting. Those companies have operating costs, too - you just don't see it as an "expense fee."

It would be interesting to compare a diversified basket of fine art works to a diversified basket of stocks. You also don't include any potential rebalancing benefit. The people that buy these likely already own a lot of VTI (or similar) and the art market may not be as correlated or efficient, which would open up opportunities.
I think it’s a completely fair comparison. If one has money to invest, their options include index funds, individual stocks, pieces of art, etc. Saying that an S&P 500 fund outperformed a Klimt is no less legitimate of a comparison than saying the S&P 500 outperformed Exxon Mobile in the last 20 years. We would laugh at a stock picker who says their picks can only be fairly compared to other individual stocks and not the index.

Now, if we know that the Klimt is a lower risk investment (eg, less volatile or less chance of losing principal), then its risk-adjusted returns may be better.
Last edited by Doctor Rhythm on Wed Jan 19, 2022 7:24 pm, edited 1 time in total.
Cramerica
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Re: Masterworks io

Post by Cramerica »

Doctor Rhythm wrote: Wed Jan 19, 2022 7:20 pm
Cramerica wrote: Wed Jan 19, 2022 7:03 pm That's an apples and oranges comparison. If you're going to compare a single painting, you'd have to compare to a single stock. There are plenty of companies that went bankrupt in that recession you cite. Plenty of other single stocks that underperformed the painting. Those companies have operating costs, too - you just don't see it as an "expense fee."

It would be interesting to compare a diversified basket of fine art works to a diversified basket of stocks. You also don't include any potential rebalancing benefit. The people that buy these likely already own a lot of VTI (or similar) and the art market may not be as correlated or efficient, which would open up opportunities.
I think it’s a completely fair comparison. If one has money to invest, their options include index funds, individual stocks, pieces of art, etc. Saying that an S&P 500 fund outperformed a Klimt is no less legitimate of a comparison than saying the S&P 500 outperformed Exxon Mobile in the last 20 years. We would laugh at a stock picker who says their picks can only be fairly compared to other individual stocks and not the index.
Well it's not a matter of opinion really.

Every portfolio's performance should be judged against an appropriate benchmark.

Comparing a 100% bond portfolio to the S&P500 and then drawing conclusions about whether or not to invest in bonds based on that is pretty silly.
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Re: Masterworks io

Post by Doctor Rhythm »

Cramerica wrote: Wed Jan 19, 2022 7:23 pm
Doctor Rhythm wrote: Wed Jan 19, 2022 7:20 pm
Cramerica wrote: Wed Jan 19, 2022 7:03 pm That's an apples and oranges comparison. If you're going to compare a single painting, you'd have to compare to a single stock. There are plenty of companies that went bankrupt in that recession you cite. Plenty of other single stocks that underperformed the painting. Those companies have operating costs, too - you just don't see it as an "expense fee."

It would be interesting to compare a diversified basket of fine art works to a diversified basket of stocks. You also don't include any potential rebalancing benefit. The people that buy these likely already own a lot of VTI (or similar) and the art market may not be as correlated or efficient, which would open up opportunities.
I think it’s a completely fair comparison. If one has money to invest, their options include index funds, individual stocks, pieces of art, etc. Saying that an S&P 500 fund outperformed a Klimt is no less legitimate of a comparison than saying the S&P 500 outperformed Exxon Mobile in the last 20 years. We would laugh at a stock picker who says their picks can only be fairly compared to other individual stocks and not the index.
Well it's not a matter of opinion really.

Every portfolio's performance should be judged against an appropriate benchmark.

Comparing a 100% bond portfolio to the S&P500 and then drawing conclusions about whether or not to invest in bonds based on that is pretty silly.
I amended my post to discuss risk-adjusted return, which addresses the question of bonds as lower return but lower risk. For something like as non-liquid (and thus rarely ever priced to market) as a painting, I don’t think we can safely assess risk.
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Re: Masterworks io

Post by Globalviewer58 »

“There’s a sucker born every minute.” P.T. Barnum
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Re: Masterworks io

Post by JoMoney »

I've heard advertisements for it. While I'm sure it's legitimate, it sounded like the kind of scammy thing I'd avoid.
I always thought "investing" in art was the kind of thing people did to launder money, evade taxes, or to spend lots of money (not invest) on something to advertise their wealth through a display of spending on something of no practical use.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
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Re: Masterworks io

Post by Doctor Rhythm »

We hold the artwork 3-10 years - Wait until we sell the painting to receive your pro rata proceeds, after our fees.
Based on what oldcomputerguy posted from Masterworks, it sounds like you are investing in a share of a specific painting, rather than in a share of the company as a whole. This seems more akin to making a concentrated bet rather than diversification. Also, what prevents them from selling your painting at a suboptimal price or time to raise cash to buy a more promising painting or to serve the interests of their largest investors?
Last edited by Doctor Rhythm on Thu Jan 20, 2022 10:59 am, edited 1 time in total.
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Re: Masterworks io

Post by nydoc »

sport wrote: Wed Jan 19, 2022 4:23 pm The expression about "a ten-foot pole" comes to mind.
It has become 20 feet pole due to inflation.
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Re: Masterworks io

Post by arcticpineapplecorp. »

Cramerica wrote: Wed Jan 19, 2022 7:23 pm
Doctor Rhythm wrote: Wed Jan 19, 2022 7:20 pm
Cramerica wrote: Wed Jan 19, 2022 7:03 pm That's an apples and oranges comparison. If you're going to compare a single painting, you'd have to compare to a single stock. There are plenty of companies that went bankrupt in that recession you cite. Plenty of other single stocks that underperformed the painting. Those companies have operating costs, too - you just don't see it as an "expense fee."

It would be interesting to compare a diversified basket of fine art works to a diversified basket of stocks. You also don't include any potential rebalancing benefit. The people that buy these likely already own a lot of VTI (or similar) and the art market may not be as correlated or efficient, which would open up opportunities.
I think it’s a completely fair comparison. If one has money to invest, their options include index funds, individual stocks, pieces of art, etc. Saying that an S&P 500 fund outperformed a Klimt is no less legitimate of a comparison than saying the S&P 500 outperformed Exxon Mobile in the last 20 years. We would laugh at a stock picker who says their picks can only be fairly compared to other individual stocks and not the index.
Well it's not a matter of opinion really.

Every portfolio's performance should be judged against an appropriate benchmark.

Comparing a 100% bond portfolio to the S&P500 and then drawing conclusions about whether or not to invest in bonds based on that is pretty silly.
what's the risk adjusted return of masterworks io?

you're the one interested so don't you think you should know what it's risk adjusted returns should be compared to other investments?

not all assets do, see below commodities and gold haven't rewarded you for the amount of risk taken compared to S&P500 for instance:

Image
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